Effective Lives of Assets Rulings Shakes Up Property Depreciation Allowances

Published August 19, 2019 | By Napier & Blakeley

Property investors will see an extension to the effective lives of Plant & Equipment assets while others maybe reduced or deleted resulting from recent changes to the tax rulings for residential properties purchased from 1 July 2019. The effective life of an asset refers to the length of time an asset can be depreciated.

Newly built properties will be the most impacted, as investors can claim depreciation allowances for Plant & Equipment Division 40. Older or second-hand residential properties purchased after 9^th May 2017 can claim depreciation on new equipment bought to improve the properties.

In total 32 items have been changed or added to the effective life asset list in TR 2018/4 as per Section 40-95 of the Income Tax Assessment Act 1997 for residential property owners (ANZSIC 67110).

“I have assessed the list and found the depreciation life of 16 assets has been reduced. A further 16 new items have been added to the list and are eligible for inclusion,” said Paul Mazoletti, National Director, Napier & Blakeley.

“Some investors will benefit from the new assets with extra items included in their tax schedules to depreciate over time. While other assets will have a reduced life; effectively improving the value of their assets to claim.

“The good news is the ruling is grandfathered. Fortunately not impacting existing owners of residential investment properties purchased before 1 July 2019. But it will affect depreciation allowances for plant & equipment purchased to upgrade properties and improve their value through renovations.

“Overall, investors will find they’re better off claiming depreciation allowances. Our clients have offset rental income and saved thousands in personal income tax. It makes good business sense to use all means at your disposal to achieve a profitable return on your investment,” said Mr Mazoletti.

Some of the Plant & Equipment Assets affected by the changes include:

floor coverings, carpet – 8 years
home automation control assets – 10 years
hydronic assets, water heater – 15 years
skylights controls and motors – 10 years each
dishwasher, microwave ovens and washing machine – 8 years each
and clothes dryer - 7 years
swimming pool assets, blankets – 8 years
chlorinators, filtration including pumps - 10 years each.

All property investors are reminded to keep accurate records of their plant & equipment purchases as well as expenses incurred in carrying out capital works to assist Quantity Surveyors or Tax Analysts prepare accurate and comprehensive depreciation schedules.

Reference Australian Taxation Office / Capital Allowances www.ato.gov.au

	BRISBANE Paul Mazoletti National Director o. 07 3221 8255 m. 0408 749 202 e. pmazoletti@napierblakeley.com		SYDNEY Peter Osborn Director o. 02 9299 1899 m. 0439 765 571 e. posborn@napierblakeley.com

	BRISBANE Kath Hemphill National Residential Manager o. 1300 730 382 m. 0409 722 709 e. khemphill@napierblakeley.com		MELBOURNE John Mathew Director o. 03 9915 6300 m. 0414 559 326 e. jmathew@napierblakeley.com

For 34 years Napier & Blakeley have been providing the following services to the property industry:

Property Acquisition & Disposal Technical Due Diligence
Property Development Due Diligence
Quantity Surveying
Capital Expenditure Forecasting
Make Good Reporting
Energy Management
Development Monitoring
Property Tax Depreciation

Please contact any of the people below for more information or assistance:

SYDNEY

	Alastair Walker Managing Director m. 0419 503 289 e. awalker@napierblakeley.com		Peter Hammond Director m. 0419 980 901 e. phammond@napierblakeley.com

	Peter Osborn Director m. 0439 765 571 e. posborn@napierblakeley.com		Stephen Cooke Associate Director m. 0409 228 552 e. scooke@napierblakeley.com

MELBOURNE

	Craig Smith Director m. 0407 371 664 e. csmith@napierblakeley.com		Rob Howells National Director . m. 0437 649 082 e. rhowells@napierblakeley.com

	John Mathew Director m. 0414 559 326 e. jmathew@napierblakeley.com		Ian Gardner Associate Director m. 0488 225 569 e. igardner@napierblakeley.com

	Richard McOmish Associate Director m. 0409 478 460 e. rmcomish@napierblakeley.com

BRISBANE

	Paul Mazoletti National Director m. 0408 749 202 e. pmazoletti@napierblakeley.com		Gavin Peach Associate Director . m. 0412 225 781 e. gpeach@napierblakeley.com

	Adam Greene Associate Director m. 0409 724 395 e. agreene@napierblakeley.com		Paul Cosker Associate Director m. 0434 400 107 e. pcosker@napierblakeley.com

PERTH

	Graham Rigby Associate Director m. 0419 847 998 e. grigby@napierblakeley.com		Nick Taylor Senior Associate . m. 0418 337 225 e. ntaylor@napierblakeley.com